Session of 1999
HOUSE BILL No. 2088
An Act concerning sickness and accident
insurance covering groups of persons; relating to
conversion of such policies; amending K.S.A.
1998 Supp. 40-2209 and repealing the
existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 1998 Supp.
40-2209 is hereby amended to read as
follows: 40-2209. (a) (1) Group sickness and accident insurance is
de-
clared to be that form of sickness and accident insurance covering
groups
of persons, with or without one or more members of their families
or one
or more dependents. Except at the option of the employee or
member
and except employees or members enrolling in a group policy after
the
close of an open enrollment opportunity, no individual employee or
mem-
ber of an insured group and no individual dependent or family
member
may be excluded from eligibility or coverage under a policy
providing
hospital, medical or surgical expense benefits both with respect to
policies
issued or renewed within this state and with respect to policies
issued or
renewed outside this state covering persons residing in this state.
For
purposes of this section, an open enrollment opportunity shall be
deemed
to be a period no less favorable than a period beginning on the
employee's
or member's date of initial eligibility and ending 31 days
thereafter.
(2) An eligible employee, member or
dependent who requests en-
rollment following the open enrollment opportunity or any special
en-
rollment period for dependents as specified in subsection (3) shall
be
considered a late enrollee. An accident and sickness insurer may
exclude
a late enrollee, except during an open enrollment period. However,
an
eligible employee, member or dependent shall not be considered a
late
enrollee if:
(A) The individual:
(i) Was covered under another group
policy which provided hospital,
medical or surgical expense benefits or was covered under section
607(1)
of the employee retirement income security act of 1974 (ERISA) at
the
time the individual was eligible to enroll;
(ii) states in writing, at the time of
the open enrollment period, that
coverage under another group policy which provided hospital,
medical or
surgical expense benefits was the reason for declining enrollment,
but
only if the group policyholder or the accident and sickness insurer
re-
quired such a written statement and provided the individual with
notice
of the requirement for a written statement and the consequences of
such
written statement;
(iii) has lost coverage under another
group policy providing hospital,
medical or surgical expense benefits or under section 607(1) of the
em-
ployee retirement income security act of 1974 (ERISA) as a result
of the
termination of employment, reduction in the number of hours of
em-
ployment, termination of employer contributions toward such
coverage,
the termination of the other policy's coverage, death of a spouse
or di-
vorce or legal separation or was under a COBRA continuation
provision
and the coverage under such provision was exhausted; and
(iv) requests enrollment within 30 days
after the termination of cov-
erage under the other policy; or
(B) a court has ordered coverage to be
provided for a spouse or
minor child under a covered employee's or member's policy.
(3) (A) If an accident and sickness
insurer issues a group policy
providing hospital, medical or surgical expenses and makes coverage
avail-
able to a dependent of an eligible employee or member and such
de-
pendent becomes a dependent of the employee or member through
mar-
riage, birth, adoption or placement for adoption, then such group
policy
shall provide for a dependent special enrollment period as
described in
subsection (3) (B) of this section during which the dependent may
be
enrolled under the policy and in the case of the birth or adoption
of a
child, the spouse of an eligible employee or member may be enrolled
if
otherwise eligible for coverage.
(B) A dependent special enrollment period
under this subsection
shall be a period of not less than 30 days and shall begin on the
later of
(i) the date such dependent coverage is made available, or (ii) the
date
of the marriage, birth or adoption or placement for adoption.
(C) If an eligible employee or member
seeks to enroll a dependent
during the first 30 days of such a dependent special enrollment
period,
the coverage of the dependent shall become effective: (i) in the
case of
marriage, not later than the first day of the first month beginning
after
the date the completed request for enrollment is received; (ii) in
the case
of the birth of a dependent, as of the date of such birth; or (iii)
in the
case of a dependent's adoption or placement for adoption, the date
of
such adoption or placement for adoption.
(4) (A) No group policy providing
hospital, medical or surgical ex-
pense benefits issued or renewed within this state or issued or
renewed
outside this state covering residents within this state shall limit
or exclude
benefits for specific conditions existing at or prior to the
effective date of
coverage thereunder. Such policy may impose a preexisting
conditions
exclusion, not to exceed 90 days following the date of enrollment
for
benefits for conditions whether mental or physical, regardless of
the cause
of the condition for which medical advice, diagnosis, care or
treatment
was recommended or received in the 90 days prior to the effective
date
of enrollment. Any preexisting conditions exclusion shall run
concurrently
with any waiting period.
(B) Such policy may impose a waiting
period after full-time employ-
ment starts before an employee is first eligible to enroll in any
applicable
group policy.
(C) A health maintenance organization
which offers such policy
which does not impose any preexisting conditions exclusion may
impose
an affiliation period for such coverage, provided that: (i) such
application
period is applied uniformly without regard to any health status
related
factors and (ii) such affiliation period does not exceed two
months. The
affiliation period shall run concurrently with any waiting period
under the
plan.
(D) A health maintenance organization may
use alternative methods
from those described in this subsection to address adverse
selection if
approved by the commissioner.
(E) For the purposes of this section, the
term ``preexisting conditions
exclusion'' shall mean, with respect to coverage, a limitation or
exclusion
of benefits relating to a condition based on the fact that the
condition
was present before the date of enrollment for such coverage whether
or
not any medical advice, diagnosis, care or treatment was
recommended
or received before such date.
(F) For the purposes of this section, the
term ``date of enrollment''
means the date the individual is enrolled under the group policy
or, if
earlier, the first day of the waiting period for such
enrollment.
(G) For the purposes of this section, the
term ``waiting period''
means with respect to a group policy the period which must pass
before
the individual is eligible to be covered for benefits under the
terms of the
policy.
(5) Genetic information shall not be
treated as a preexisting condi-
tion in the absence of a diagnosis of the condition related to such
infor-
mation.
(6) A group policy providing hospital,
medical or surgical expense
benefits may not impose any preexisting condition exclusion
relating to
pregnancy as a preexisting condition.
(7) A group policy providing hospital,
medical or surgical expense
benefits may not impose any preexisting condition waiting period in
the
case of a child who is adopted or placed for adoption before
attaining 18
years of age and who, as of the last day of a 30-day period
beginning on
the date of the adoption or placement for adoption, is covered by a
policy
specified in subsection (a). This subsection shall not apply to
coverage
before the date of such adoption or placement for adoption.
(8) Such policy shall waive such a
preexisting conditions exclusion to
the extent the employee or member or individual dependent or
family
member was covered by (A) a group or individual sickness and
accident
policy, (B) coverage under section 607(1) of the employees
retirement
income security act of 1974 (ERISA), (C) a group specified in
K.S.A. 40-
2222 and amendments thereto, (D) part A or part B of title XVIII of
the
social security act, (E) title XIX of the social security act,
other than
coverage consisting solely of benefits under section 1928, (F) a
state chil-
dren's health insurance program established pursuant to title XXI
of the
social security act, (G) chapter 55 of title 10 United States code,
(H) a
medical care program of the indian health service or of a tribal
organi-
zation, (I) the Kansas uninsurable health plan act pursuant to
K.S.A. 40-
2217 et seq. and amendments thereto or a similar health
benefits risk pool
of another state, (J) a health plan offered under chapter 89 of
title 5,
United States code, (K) a health benefit plan under section 5(e) of
the
peace corps act (22 U.S.C. 2504(e), or (L) a group subject to
K.S.A. 12-
2616 et seq. and amendments thereto which provided hospital,
medical
and surgical expense benefits within 63 days prior to the effective
date of
coverage with no gap in coverage. A group policy shall credit the
periods
of prior coverage specified in subsection (a)(7) without regard to
the spe-
cific benefits covered during the period of prior coverage. Any
period that
the employee or member is in a waiting period for any coverage
under a
group health plan or is in an affiliation period shall not be taken
into
account in determining the continuous period under this
subsection.
(b) (1) An accident and sickness
insurer which offers group policies
providing hospital, medical or surgical expense benefits shall
provide a
certification as described in subsection (b)(2): (A) At the time an
eligible
employee, member or dependent ceases to be covered under such
policy
or otherwise becomes covered under a COBRA continuation
provision;
(B) in the case of an eligible employee, member or dependent
being
covered under a COBRA continuation provision, at the time such
eligible
employee, member or dependent ceases to be covered under a
COBRA
continuation provision; and (C) on the request on behalf of such
eligible
employee, member or dependent made not later than 24 months
after
the date of the cessation of the coverage described in subsection
(b)(1)
(A) or (b)(1) (B), whichever is later.
(2) The certification described in this
subsection is a written certi-
fication of (A) the period of coverage under a policy specified in
subsec-
tion (a) and any coverage under such COBRA continuation provision,
and
(B) any waiting period imposed with respect to the eligible
employee,
member or dependent for any coverage under such policy.
(c) Any group policy may impose
participation requirements, define
full-time employees or members and otherwise be designed for the
group
as a whole through negotiations between the group sponsor and the
in-
surer to the extent such design is not contrary to or inconsistent
with this
act.
(d) (1) An accident and sickness
insurer offering a group policy pro-
viding hospital, medical or surgical expense benefits must renew or
con-
tinue in force such coverage at the option of the policyholder or
certifi-
cateholder except as provided in paragraph (2) below.
(2) An accident and sickness insurer may
nonrenew or discontinue
coverage under a group policy providing hospital, medical or
surgical
expense benefits based only on one or more of the following
circum-
stances:
(A) If the policyholder or
certificateholder has failed to pay any pre-
mium or contributions in accordance with the terms of the group
policy
providing hospital, medical or surgical expense benefits or the
accident
and sickness insurer has not received timely premium payments;
(B) if the policyholder or
certificateholder has performed an act or
practice that constitutes fraud or made an intentional
misrepresentation
of material fact under the terms of such coverage;
(C) if the policyholder or
certificateholder has failed to comply with
a material plan provision relating to employer contribution or
group par-
ticipation rules;
(D) if the accident and sickness insurer
is ceasing to offer coverage
in such group market in accordance with subsections (d)(3) or
(d)(4);
(E) in the case of accident and sickness
insurer that offers coverage
under a policy providing hospital, medical or surgical expense
benefits
through an enrollment area, there is no longer any eligible
employee,
member or dependent in connection with such policy who lives,
resides
or works in the medical service enrollment area of the accident and
sick-
ness insurer or in the area for which the accident and sickness
insurer is
authorized to do business; or
(F) in the case of a group policy
providing hospital, medical or sur-
gical expense benefits which is offered through an association or
trust
pursuant to subsections (f)(3) or (f)(5), the membership of the
employer
in such association or trust ceases but only if such coverage is
terminated
uniformly without regard to any health status related factor
relating to
any eligible employee, member or dependent.
(3) In any case in which an accident and
sickness insurer which offers
a group policy providing hospital, medical or surgical expense
benefits
decides to discontinue offering such type of group policy, such
coverage
may be discontinued only if:
(A) The accident and sickness insurer
notifies all policyholders and
certificateholders and all eligible employees or members of such
discon-
tinuation at least 90 days prior to the date of the discontinuation
of such
coverage;
(B) the accident and sickness insurer
offers to each policyholder who
is provided such group policy providing hospital, medical or
surgical ex-
pense benefits which is being discontinued the option to purchase
any
other group policy providing hospital, medical or surgical expense
bene-
fits currently being offered by such accident and sickness insurer;
and
(C) in exercising the option to
discontinue coverage and in offering
the option of coverage under subparagraph (B), the accident and
sickness
insurer acts uniformly without regard to the claims experience of
those
policyholders or certificateholders or any health status related
factors re-
lating to any eligible employee, member or dependent covered by
such
group policy or new employees or members who may become
eligible
for such coverage.
(4) If the accident and sickness insurer
elects to discontinue offering
group policies providing hospital, medical or surgical expense
benefits or
group coverage to a small employer pursuant to K.S.A. 40-2209f
and
amendments thereto, such coverage may be discontinued only if:
(A) The accident and sickness insurer
provides notice to the insur-
ance commissioner, to all policyholders or certificateholders and
to all
eligible employees and members covered by such group policy
providing
hospital, medical or surgical expense benefits at least 180 days
prior to
the date of the discontinuation of such coverage;
(B) all group policies providing
hospital, medical or surgical expense
benefits offered by such accident and sickness insurer are
discontinued
and coverage under such policies are not renewed; and
(C) the accident and sickness insurer may
not provide for the issu-
ance of any group policies providing hospital, medical or surgical
expense
benefits in the discontinued market during a five year period
beginning
on the date of the discontinuation of the last such group policy
which is
nonrenewed.
(e) An accident and sickness
insurer offering a group policy provid-
ing hospital, medical or surgical expense benefits may not
establish rules
for eligibility (including continued eligibility) of any employee,
member
or dependent to enroll under the terms of the group policy based on
any
of the following factors in relation to the eligible employee,
member or
dependent: (A) Health status, (B) medical condition, including both
phys-
ical and mental illness, (C) claims experience, (D) receipt of
health care,
(E) medical history, (F) genetic information, (G) evidence of
insurability,
including conditions arising out of acts of domestic violence, or
(H) dis-
ability. This subsection shall not be construed to require a policy
providing
hospital, medical or surgical expense benefits to provide
particular ben-
efits other than those provided under the terms of such group
policy or
to prevent a group policy providing hospital, medical or surgical
expense
benefits from establishing limitations or restrictions on the
amount, level,
extent or nature of the benefits or coverage for similarly situated
individ-
uals enrolled under the group policy.
(f) Group accident and health insurance
may be offered to a group
under the following basis:
(1) Under a policy issued to an employer
or trustees of a fund es-
tablished by an employer, who is the policyholder, insuring at
least two
employees of such employer, for the benefit of persons other than
the
employer. The term ``employees'' shall include the officers,
managers,
employees and retired employees of the employer, the partners, if
the
employer is a partnership, the proprietor, if the employer is an
individual
proprietorship, the officers, managers and employees and retired
em-
ployees of subsidiary or affiliated corporations of a corporation
employer,
and the individual proprietors, partners, employees and retired
employ-
ees of individuals and firms, the business of which and of the
insured
employer is under common control through stock ownership contract,
or
otherwise. The policy may provide that the term ``employees'' may
include
the trustees or their employees, or both, if their duties are
principally
connected with such trusteeship. A policy issued to insure the
employees
of a public body may provide that the term ``employees'' shall
include
elected or appointed officials.
(2) Under a policy issued to a labor
union which shall have a consti-
tution and bylaws insuring at least 25 members of such union.
(3) Under a policy issued to the trustees
of a fund established by two
or more employers or business associations or by one or more labor
un-
ions or by one or more employers and one or more labor unions,
which
trustees shall be the policyholder, to insure employees of the
employers
or members of the union or members of the association for the
benefit
of persons other than the employers or the unions or the
associations.
The term ``employees'' shall include the officers, managers,
employees
and retired employees of the employer and the individual proprietor
or
partners if the employer is an individual proprietor or
partnership. The
policy may provide that the term ``employees'' shall include the
trustees
or their employees, or both, if their duties are principally
connected with
such trusteeship.
(4) A policy issued to a creditor, who
shall be deemed the policy-
holder, to insure debtors of the creditor, subject to the following
require-
ments: (a) The debtors eligible for insurance under the policy
shall be all
of the debtors of the creditor whose indebtedness is repayable in
install-
ments, or all of any class or classes determined by conditions
pertaining
to the indebtedness or to the purchase giving rise to the
indebtedness.
(b) The premium for the policy shall be paid by the policyholder,
either
from the creditor's funds or from charges collected from the
insured
debtors, or from both.
(5) A policy issued to an association
which has been organized and
is maintained for the purposes other than that of obtaining
insurance,
insuring at least 25 members, employees, or employees of members
of
the association for the benefit of persons other than the
association or its
officers. The term ``employees'' shall include retired employees.
The pre-
miums for the policies shall be paid by the policyholder, either
wholly
from association funds, or funds contributed by the members of
such
association or by employees of such members or any combination
thereof.
(6) Under a policy issued to any other
type of group which the com-
missioner of insurance may find is properly subject to the issuance
of a
group sickness and accident policy or contract.
(g) Each such policy shall contain in
substance: (1) A provision that
a copy of the application, if any, of the policyholder shall be
attached to
the policy when issued, that all statements made by the
policyholder or
by the persons insured shall be deemed representations and not
warran-
ties, and that no statement made by any person insured shall be
used in
any contest unless a copy of the instrument containing the
statement is
or has been furnished to such person or the insured's
beneficiary.
(2) A provision setting forth the
conditions under which an individ-
ual's coverage terminates under the policy, including the age, if
any, to
which an individual's coverage under the policy shall be limited,
or, the
age, if any, at which any additional limitations or restrictions
are placed
upon an individual's coverage under the policy.
(3) Provisions setting forth the notice
of claim, proofs of loss and
claim forms, physical examination and autopsy, time of payment of
claims,
to whom benefits are payable, payment of claims, change of
beneficiary,
and legal action requirements. Such provisions shall not be less
favorable
to the individual insured or the insured's beneficiary than those
corre-
sponding policy provisions required to be contained in individual
accident
and sickness policies.
(4) A provision that the insurer will
furnish to the policyholder, for
the delivery to each employee or member of the insured group, an
in-
dividual certificate approved by the commissioner of insurance
setting
forth in summary form a statement of the essential features of the
insur-
ance coverage of such employee or member, the procedure to be
followed
in making claim under the policy and to whom benefits are payable.
Such
certificate shall also contain a summary of those provisions
required under
paragraphs (2) and (3) of this subsection (g) in addition to the
other
essential features of the insurance coverage. If dependents are
included
in the coverage, only one certificate need be issued for each
family unit.
(h) No group disability income policy
which integrates benefits with
social security benefits, shall provide that the amount of any
disability
benefit actually being paid to the disabled person shall be reduced
by
changes in the level of social security benefits resulting either
from
changes in the social security law or due to cost of living
adjustments
which become effective after the first day for which disability
benefits
become payable.
(i) A group policy of insurance delivered
or issued for delivery or
renewed which provides hospital, surgical or major medical expense
in-
surance, or any combination of these coverages, on an expense
incurred
basis, shall provide that an employee or member or such employee's
or
member's covered dependents whose insurance under the group
policy
has been terminated for any reason, including discontinuance of
the
group policy in its entirety or with respect to an insured class,
and who
has been continuously insured under the group policy or under any
group
policy providing similar benefits which it replaces for at least
three
months immediately prior to termination, shall be entitled to have
such
coverage nonetheless continued under the group policy for a period
of
six months and have issued to the employee or member or such
em-
ployee's or member's covered dependents by the insurer, at the end
of
such six-month period of continuation, a policy of health insurance
which
conforms to the applicable requirements specified in this
subsection. This
requirement shall not apply to a group policy which provides
benefits for
specific diseases or for accidental injuries only or a group policy
issued to
an employer subject to the continuation and conversion obligations
set
forth at title I, subtitle B, part 6 of the employee retirement
income
security act of 1974 or at title XXII of the public health service
act, as
each act was in effect on January 1, 1987 to the extent federal law
provides
the employee or member or such employee's or member's covered
de-
pendents with equal or greater continuation or conversion rights;
or an
employee or member or such employee's or member's covered
depend-
ents shall not be entitled to have such coverage continued or a
converted
policy issued to the employee or member or such employee's or
member's
covered dependents if termination of the insurance under the group
pol-
icy occurred because:
(1) The employee or member or such
employee's or member's cov-
ered dependents failed to pay any required contribution after
receiving
reasonable notice of such required contribution from the insurer in
ac-
cordance with rules and regulations adopted by the commissioner of
in-
surance; (2) any discontinued group coverage was replaced by
similar
group coverage within 31 days; (3) the employee or member is or
could
be covered by medicare (title XVIII of the United States social
security
act as added by the social security amendments of 1965 or as
later
amended or superseded); or (4) the employee or member is or could
be
covered to the same extent by any other insured or lawful
self-insured
arrangement which provides expense incurred hospital, surgical or
med-
ical coverage and benefits for individuals in a group under which
the
person was not covered prior to such termination. In the event the
group
policy is terminated and not replaced the insurer may issue an
individual
policy or certificate in lieu of a conversion policy or the
continuation of
group coverage required herein if the individual policy or
certificate pro-
vides substantially similar coverage for the same or less premium
as the
group policy. In any event, the employee or member shall have the
option
to be issued a conversion policy which meets the requirements set
forth
in this subsection in lieu of the right to continue group
coverage.
(j) The continued coverage and the
issuance of a converted policy
shall be subject to the following conditions:
(1) Written application for the converted
policy shall be made and
the first premium paid to the insurer not later than 31 days after
termi-
nation of coverage under the group policy or not later than 31 days
after
notice is received pursuant to paragraph 20 of this subsection.
(2) The converted policy shall be issued
without evidence of insur-
ability.
(3) The terminated employee or member
shall pay to the insurer the
premium for the six-month continuation of coverage and such
premium
shall be the same as that applicable to members or employees
remaining
in the group. Failure to pay such premium shall terminate coverage
under
the group policy at the end of the period for which the premium has
been
paid. The premium rate charged for converted policies issued
subsequent
to the period of continued coverage shall be such that can be
expected
to produce an anticipated loss ratio of not less than 80% based
upon
conversion, morbidity and reasonable assumptions for expected
trends in
medical care costs. In the event the group policy is terminated and
is not
replaced, converted policies may be issued at self-sustaining rates
that
are not unreasonable in relation to the coverage provided based on
con-
version, morbidity and reasonable assumptions for expected trends
in
medical care costs. The frequency of premium payment shall be the
fre-
quency customarily required by the insurer for the policy form and
plan
selected, provided that the insurer shall not require premium
payments
less frequently than quarterly.
(4) The effective date of the converted
policy shall be the day fol-
lowing the termination of insurance under the group policy.
(5) The converted policy shall cover the
employee or member and
the employee's or member's dependents who were covered by the
group
policy on the date of termination of insurance. At the option of
the in-
surer, a separate converted policy may be issued to cover any
dependent.
(6) The insurer shall not be required to
issue a converted policy
covering any person if such person is or could be covered by
medicare
(title XVIII of the United States social security act as added by
the social
security amendments of 1965 or as later amended or superseded).
Fur-
thermore, the insurer shall not be required to issue a converted
policy
covering any person if:
(A) (i) Such person is covered for
similar benefits by another hos-
pital, surgical, medical or major medical expense insurance policy
or hos-
pital or medical service subscriber contract or medical practice or
other
prepayment plan or by any other plan or program, or
(ii) such person is eligible for similar
benefits (whether or not cov-
ered therefor) under any arrangement of coverage for individuals in
a
group, whether on an insured or uninsured basis, or
(iii) similar benefits are provided for
or available to such person,
pursuant to or in accordance with the requirements of any state or
federal
law, and
(B) the benefits provided under the
sources referred to in clause (A)
(i) above for such person or benefits provided or available under
the
sources referred to in clauses (A) (ii) and (A) (iii) above for
such person,
together with the benefits provided by the converted policy, would
result
in over-insurance according to the insurer's standards. The
insurer's stan-
dards must bear some reasonable relationship to actual health care
costs
in the area in which the insured lives at the time of conversion
and must
be filed with the commissioner of insurance prior to their use in
denying
coverage.
(7) A converted policy may include a
provision whereby the insurer
may request information in advance of any premium due date of
such
policy of any person covered as to whether:
(A) Such person is covered for similar
benefits by another hospital,
surgical, medical or major medical expense insurance policy or
hospital
or medical service subscriber contract or medical practice or other
pre-
payment plan or by any other plan or program;
(B) such person is covered for similar
benefits under any arrange-
ment of coverage for individuals in a group, whether on an insured
or
uninsured basis; or
(C) similar benefits are provided for or
available to such person,
pursuant to or in accordance with the requirements of any state or
federal
law.
(8) The converted policy may provide that
the insurer may refuse to
renew the policy and the coverage of any person insured for the
following
reasons only:
(A) Either the benefits provided under
the sources referred to in
clauses (A) (i) and (A) (ii) of paragraph 6 for such person or
benefits
provided or available under the sources referred to in clause (A)
(iii) of
paragraph 6 for such person, together with the benefits provided by
the
converted policy, would result in over-insurance according to the
insurer's
standards on file with the commissioner of insurance, or the
converted
policyholder fails to provide the requested information;
(B) fraud or material misrepresentation
in applying for any benefits
under the converted policy; or
(C) eligibility of the insured
person for coverage under medicare
(title XVIII of the United States social security act as
added by the social
security amendments of 1965 or as later amended or
superseded) or un-
der any other state or federal law (except title XIX of the
social security
act of 1965) providing for benefits similar to those
provided by the con-
verted policy; or
(D) (C) other
reasons approved by the commissioner of insurance.
(9) An insurer shall not be required to
issue a converted policy which
provides coverage and benefits in excess of those provided under
the
group policy from which conversion is made.
(10) If the converted policy provides
that any hospital, surgical or
medical benefits payable may be reduced by the amount of any
such
benefits payable under the group policy after the termination of
the in-
dividual's insurance or the converted policy includes provisions so
that
during the first policy year the benefits payable under the
converted pol-
icy, together with the benefits payable under the group policy,
shall not
exceed those that would have been payable had the individual's
insurance
under the group policy remained in force and effect, the converted
policy
shall provide credit for deductibles, copayments and other
conditions sat-
isfied under the group policy.
(11) Subject to the provisions and
conditions of this act, if the group
insurance policy from which conversion is made insures the employee
or
member for major medical expense insurance, the employee or
member
shall be entitled to obtain a converted policy providing
catastrophic or
major medical coverage under a plan meeting the following
requirements:
(A) A maximum benefit at least equal to
either, at the option of the
insurer, paragraphs (i) or (ii) below:
(i) The smaller of the following
amounts:
The maximum benefit provided under the group
policy or a maximum
payment of $250,000 per covered person for all covered medical
expenses
incurred during the covered person's lifetime.
(ii) The smaller of the following
amounts:
The maximum benefit provided under the group
policy or a maximum
payment of $250,000 for each unrelated injury or sickness.
(B) Payment of benefits at the rate of
80% of covered medical ex-
penses which are in excess of the deductible, until 20% of such
expenses
in a benefit period reaches $1,000, after which benefits will be
paid at
the rate of 100% during the remainder of such benefit period.
Payment
of benefits for outpatient treatment of mental illness, if provided
in the
converted policy, may be at a lesser rate but not less than
50%.
(C) A deductible for each benefit period
which, at the option of the
insurer, shall be (i) the sum of the benefits deductible and $100,
or (ii)
the corresponding deductible in the group policy. The term
``benefits
deductible,'' as used herein, means the value of any benefits
provided on
an expense incurred basis which are provided with respect to
covered
medical expenses by any other hospital, surgical, or medical
insurance
policy or hospital or medical service subscriber contract or
medical prac-
tice or other prepayment plan, or any other plan or program whether
on
an insured or uninsured basis, or in accordance with the
requirements of
any state or federal law and, if pursuant to the conditions of
paragraph
(13), the converted policy provides both basic hospital or surgical
cover-
age and major medical coverage, the value of such basic
benefits.
If the maximum benefit is determined by clause
(a)(ii) of this para-
graph, the insurer may require that the deductible be satisfied
during a
period of not less than three months if the deductible is $100 or
less, and
not less than six months if the deductible exceeds $100.
(D) The benefit period shall be each
calendar year when the maxi-
mum benefit is determined by clause (A)(i) of this paragraph or 24
months
when the maximum benefit is determined by clause (A)(ii) of this
para-
graph.
(E) The term ``covered medical
expenses,'' as used above, shall in-
clude at least, in the case of hospital room and board charges 80%
of the
average semiprivate room and board rate for the hospital in which
the
individual is confined and twice such amount for charges in an
intensive
care unit. Any surgical schedule shall be consistent with those
customarily
offered by the insurer under group or individual health insurance
policies
and must provide at least a $1,200 maximum benefit.
(12) The conversion privilege required by
this act shall, if the group
insurance policy insures the employee or member for basic hospital
or
surgical expense insurance as well as major medical expense
insurance,
make available the plans of benefits set forth in paragraph 11. At
the
option of the insurer, such plans of benefits may be provided under
one
policy.
The insurer may also, in lieu of the plans of
benefits set forth in
paragraph (11), provide a policy of comprehensive medical expense
ben-
efits without first dollar coverage. The policy shall conform to
the require-
ments of paragraph (11). An insurer electing to provide such a
policy shall
make available a low deductible option, not to exceed $100, a high
de-
ductible option between $500 and $1,000, and a third deductible
option
midway between the high and low deductible options.
(13) The insurer, at its option, may also
offer alternative plans for
group health conversion in addition to those required by this
act.
(14) In the event coverage would be
continued under the group
policy on an employee following the employee's retirement prior to
the
time the employee is or could be covered by medicare, the employee
may
elect, in lieu of such continuation of group insurance, to have the
same
conversion rights as would apply had such person's insurance
terminated
at retirement by reason of termination of employment or
membership.
(15) The converted policy may provide for
reduction of coverage on
any person upon such person's eligibility for coverage under
medicare
(title XVIII of the United States social security act as added by
the social
security amendments of 1965 or as later amended or superseded) or
un-
der any other state or federal law providing for benefits similar
to those
provided by the converted policy.
(16) Subject to the conditions set forth
above, the continuation and
conversion privileges shall also be available:
(A) To the surviving spouse, if any, at
the death of the employee or
member, with respect to the spouse and such children whose
coverage
under the group policy terminates by reason of such death,
otherwise to
each surviving child whose coverage under the group policy
terminates
by reason of such death, or, if the group policy provides for
continuation
of dependents' coverage following the employee's or member's death,
at
the end of such continuation;
(B) to the spouse of the employee or
member upon termination of
coverage of the spouse, while the employee or member remains
insured
under the group policy, by reason of ceasing to be a qualified
family
member under the group policy, with respect to the spouse and
such
children whose coverage under the group policy terminates at the
same
time; or
(C) to a child solely with respect to
such child upon termination of
such coverage by reason of ceasing to be a qualified family member
under
the group policy, if a conversion privilege is not otherwise
provided above
with respect to such termination.
(17) The insurer may elect to provide
group insurance coverage
which complies with this act in lieu of the issuance of a converted
indi-
vidual policy.
(18) A notification of the conversion
privilege shall be included in
each certificate of coverage.
(19) A converted policy which is
delivered outside this state must be
on a form which could be delivered in such other jurisdiction as a
con-
verted policy had the group policy been issued in that
jurisdiction.
(20) The insurer shall give the employee
or member and such em-
ployee's or member's covered dependents: (A) Reasonable notice of
the
right to convert at least once during the six-month continuation
period;
or (B) for persons covered under 29 U.S.C. 1161 et seq., notice of
the
right to a conversion policy required by this subsection (d) shall
be given
at least 30 days prior to the end of the continuation period
provided by
29 U.S.C. 1161 et seq. or from the date the employer ceases to
provide
any similar group health plan to any employee. Such notices shall
be
provided in accordance with rules and regulations adopted by the
com-
missioner of insurance.
(k) (1) No policy issued by an
insurer to which this section applies
shall contain a provision which excludes, limits or otherwise
restricts cov-
erage because medicaid benefits as permitted by title XIX of the
social
security act of 1965 are or may be available for the same accident
or
illness.
(2) Violation of this subsection shall be
subject to the penalties pre-
scribed by K.S.A. 40-2407 and 40-2411, and amendments thereto.
(l) The commissioner is hereby authorized
to adopt such rules and
regulations as may be necessary to carry out the provisions of this
section.
Sec. 2. K.S.A. 1998 Supp. 40-2209 is hereby
repealed.
Sec. 3. This act shall take effect and be in force
from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the
HOUSE, and passed that body
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Passed the SENATE ______________________________
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APPROVED ______________________________
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